Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds

<RULE> OFFICE OF MANAGEMENT AND BUDGET <SUBAGY>Office of Federal Procurement Policy</SUBAGY> DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION <CFR>48 CFR Parts 1, 2, 3, 4, 5, 6, 8, 9, 10, 12, 13, 15, 16, 17, 19, 22, 23, 25, 26, 30, 32, 36, 42, 50, and 52</CFR> <DEPDOC>[FAC 2025-06, FAR Case 2024-001; Docket No. 2024-0001; Sequence No. 1]</DEPDOC> <RIN>RIN 9000-AO73</RIN> <SUBJECT>Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of Federal Procurement Policy (OFPP), Office of Management and Budget (OMB); Department of Defense (DoD); General Services Administration (GSA); and National Aeronautics and Space Administration (NASA). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> OFPP, DoD, GSA, and NASA (collectively referred to as the Federal Acquisition Regulatory Council, or FAR Council) are issuing a final rule amending the Federal Acquisition Regulation (FAR) to further implement a statute, which requires an adjustment every five years of statutory acquisition-related thresholds for inflation. The adjustment uses the Consumer Price Index for all urban consumers and does not apply to the Construction Wage Rate Requirements statute, Service Contract Labor Standards statute, performance and payment bonds, and trade agreements thresholds. OFPP, DoD, GSA, and NASA are also using the same methodology to adjust nonstatutory FAR acquisition-related thresholds in 2025. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Effective: October 1, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> For clarification of content, contact <E T="03">FARpolicy@gsa.gov</E> or call 202-969-4075. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755 or <E T="03">GSARegSec@gsa.gov.</E> Please cite FAC 2025-06, FAR Case 2024-001. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> DoD, GSA, and NASA published a proposed rule at 89 FR 94649 on November 29, 2024, to further implement 41 U.S.C. 1908. Section 1908 requires an adjustment every five years (on October 1 of each year evenly divisible by five) of statutory acquisition-related thresholds for inflation, using the Consumer Price Index (CPI) for all urban consumers, except for the Construction Wage Rate Requirements statute (Davis-Bacon Act), Service Contract Labor Standards statute, performance and payment bonds, and trade agreements thresholds (see FAR 1.109). As a matter of policy, OFPP, DoD, GSA, and NASA are also using the same methodology to adjust nonstatutory FAR acquisition-related thresholds on October 1, 2025. The preamble to the proposed rule contained detailed explanations of— • What an acquisition-related threshold is; • Which acquisition-related thresholds are not subject to escalation adjustment under this case; • How the Defense Acquisition Regulations Council and the Civilian Agency Acquisition Council (Councils) analyze statutory and nonstatutory acquisition-related thresholds; and • The effect of this rule on the most heavily used thresholds. The following list identifies the impact of this rule on heavily-used thresholds. • The micro-purchase threshold (MPT) at FAR 2.101 is increased from $10,000 to $15,000. In paragraphs 3(i) and (ii) of the definition, which address acquisitions to support contingency operations or to facilitate defense against certain attacks, the thresholds are increasing from $20,000 to $25,000 and from $35,000 to $40,000, respectively. • The simplified acquisition threshold (SAT) is increased from $250,000 to $350,000. In paragraphs (1)(i) and (ii) of the definition, which address acquisitions to support contingency operations or to facilitate defense against certain attacks, the thresholds are increasing from $800,000 to $1 million and from $1.5 million to $2 million, respectively. In paragraph (2) of the definition, which addresses support for a humanitarian or peacekeeping operation, the threshold increases from $500,000 to $650,000. • The threshold for reporting first-tier subcontract information including executive compensation increases from $30,000 to $40,000 (FAR 4.1401). • The preaward and post-award notices (FAR part 5) remain at $25,000 because of trade agreements. • The threshold for requiring a separate justification or determination and findings when a contracting officer intends to award a sole-source contract to an eligible 8(a) participant is increased from $25 million to $30 million (FAR 6.204(b)). • Approval thresholds of justifications for other than full and open competition (FAR 6.304) will increase from $750,000 to $900,000 at paragraphs (a)(1) and (2). In paragraphs (a)(2) through (4), the figure of $15 million will increase to $20 million, and $75 million will increase to $90 million. The $100 million threshold applicable to DoD, NASA, and the Coast Guard will increase to $150 million. • The ceiling for simplified procedures for certain commercial products and commercial services (FAR 13.500(a)) is increased from $7.5 million to $9 million. For acquisitions described at FAR 13.500(c), the $15 million ceiling is not increasing. • The cost or pricing data threshold at FAR 15.403-4, for contracts awarded before July 1, 2018, increases from $750,000 to $950,000. For contracts issued on or after July 1, 2018, the threshold increases from $2 million to $2.5 million. • The prime contractor subcontracting plan (FAR 19.702) threshold is increasing from $750,000 to $900,000, and the associated threshold for construction is increasing from $1.5 million to $2 million. This is the fifth review of FAR acquisition-related thresholds since the statute was passed on October 28, 2004 (section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005). The last review was conducted under FAR case 2019-013 during FY 2020. The final rule under that case was published in the <E T="04">Federal Register</E> on October 2, 2020 (85 FR 62485), effective October 1, 2020. Thirty-three respondents submitted comments on the proposed rule. <HD SOURCE="HD1">II. Discussion and Analysis</HD> The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. <HD SOURCE="HD2">A. Summary of Significant Changes</HD> The Councils have historically used the March CPI as the factor to calculate the final escalatory amounts, although the statute does not specify a certain month. The proposed rule estimated the March 2025 CPI for all urban consumers at 323.193. The actual March 2025 CPI was 319.799. This final rule uses the April 2025 CPI of 320.795. The Councils have elected to use the April 2025 CPI because the April CPI was available for use in the final rule and it provides a more accurate reflection of inflation. Some thresholds published in the proposed rule will not escalate to the extent provided in the proposed rule. The Councils have recalculated the thresholds at FAR 6.304(a)(1) through (a)(4), 8.405-6(d)(1) through (d)(4), 12.203, 13.000, 13.003(c) and (g), 13.303-5(b), 13.500, 13.501(a), 16.505(b)(2), 19.702, 19.704, 19.708, 19.1406, 22.1103, 42.1502, 50.102, and the contract clause 52.248-3. One threshold published in the proposed rule was very close but did not reach the statutory calculation formula amount for escalation and is removed from this final rule. The Councils have removed the proposed escalation for the $15 million threshold described at FAR 13.500(c). Conforming changes for this threshold are made at FAR 12.203, 13.000, 13.003, 13.303-5(b), and 13.500(a). One threshold is escalated in response to a public comment. The cost or pricing data threshold at FAR 15.403-4, for contracts awarded before July 1, 2018, increases from $750,000 to $950,000. Conforming changes are made to the contract clauses at FAR 52.214-28 (Alt 1), 52.215-12 (Alt 1), and 52.215-13 (Alt 1). <HD SOURCE="HD2">B. Analysis of Public Comments</HD> <E T="03">Comment:</E> Numerous respondents expressed support for the rule. <E T="03">Response:</E> The Councils acknowledge the support. <E T="03">Comment:</E> Several respondents expressed support for the rule, but requested that the Councils consider increasing the Construction Wage Rate Requirements statute (Davis-Bacon Act) and the Service Contract Labor Standards statute thresholds. <E T="03">Response:</E> The statute directing inflationary adjustments specifically excludes adjustments to the Construction Wage Rate Requirements statute (Davis-Bacon Act) threshold, the Service Contract Labor Standards statute threshold, performance and payment bonds, and trade agreements thresholds (see FAR 1.109). Therefore, the FAR Council does not have the authority to adjust these thresholds. <E T="03">Comment:</E> A respondent stated that the Councils did not adjust the Truth In Negotiations Act (TINA) threshold at FAR 15.403-4(a)(1), which applies to contracts awarded before July 1, 2018. <E T="03">Response:</E> The Councils agree and have revised the final rule to escalate the threshold and to implement conforming changes in the associated contract clauses. <E T="03">Comment:</E> A respondent opposed the threshold requirement for limiting competition (FAR part 6) to eligible 8(a) awards over $25 million increase to $30 million. <E T="03">Response:</E> This rule does not limit the requirement for competition in FAR part 6 to eligible 8(a) participants for contracts valued at more than $30 million. The rule escalates the threshold for requiring a separate justification or determination and findings when a contracting officer i ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 65k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━